Twitter (TWTR) has been one of the biggest stories of the tech world this year, and not in a good way.
The social media company has proven to be the classic story of a hot tech startup with a super-hyped initial public offering that hits Wall Street without turning a profit and soon has to answer to unhappy investors.
But when it comes to tech stocks that are failing to turn a profit and failing to please investors, Twitter is hardly alone.
While tech generally conjures up thoughts of innovation and growth, these three picks have proven to be little more than a waste of money.
Take a look at these would-be highfliers and don’t make the mistake of investing in any ol’ tech stock without doing your due diligence.
Tech Stocks Wasting Your Money: Yahoo (YAHOO)
I think it’s safe to say that the Yahoo (YHOO) Marissa Mayer turnaround story has suffered a hard landing. Alibaba (BABA) helped the stock gain some ground, but that was just a short-lived catalyst and now fundamentals are taking center stage.
Oh, and they’re anything but pretty.
In the most recent quarter, Yahoo posted an operating loss of $86 million — compared to an operating profit of $42 million a year ago. Its cost of revenue expanded from $54 million a year ago to $223 million, and net earnings fell from $6.77 billion to $76 million.
Yahoo has also posted three straight earnings misses and just cut its Q4 guidance. The consensus is now for earnings per share to be shaved by around 56% during the quarter. No wonder shares have fallen 34% so far this year.
Tech Stocks Wasting Your Money: Box (BOX)
Box (BOX) is at least growing its billings, sales and customer roster. But in terms of a business model — you know, money actually trickling down to the bottom line — things aren’t looking so good.
The company is expected to lose 31 cents per share for the current quarter and the quarter after. For the full year, it’s expected to post a loss of $1.17, and that’s expected to narrow only a bit to a loss of 88 cents per share during the year after.
As a result, BOX shares have lost 44% of their value since going public in late January and are currently sitting 7% below its IPO price of $14.
With that downward momentum and no profits in sight, I’d recommend waiting until Box grows up before making a bet.
Tech Stocks Wasting Your Money: Hortonworks (HDP)
Shortly before Box went public, Hortonworks hit Wall Street sporting an initial price of $16. The good news? Shares are higher, currently sitting at just over $20. The bad news? Year-to-date, HDP stock has still lost more than 25% — and the company is bleeding money.
It’s not easy to make money off of open-source technology, much less fully grasp the market — which is why Hortonworks is such a risky pick. I’d bet Warren Buffett wouldn’t touch it with a 10-foot pole.
While losses are narrowing, the current full-year forecast is for a loss of $3.27, while next year the loss is expected to come to $3.13. That’s causing a decent amount of bearish sentiment — 21% of the stock’s float is sold short (which would take eight days to cover).
Hortonworks is slated to report third-quarter earnings on Nov. 4 … but don’t expect anything more than the usual losses.
Alyssa Oursler is based in San Francisco and writes about technology, investing, gender and entrepreneurship. Her work has appeared on Forbes, Business Insider, MSN Money and more. You can follow her on Twitter here or check out her personal site here. As of this writing, she did not hold a position in any of the aforementioned securities.
